It is often stated that no man dies without a will – if he does not have one prepared during his life, the state will draw one up for him. In other words, if you do not plan for the succession of your estate after your demise, a state court judge by statute will determine who receives your wealth by looking to the laws of intestate succession. However, many negative issues can arise when estate are distributed this way. The most obvious is that the person’s assets may pass to individuals that the decedent did not want to share in his or her estate. Moreover, even if the wealth does pass to the people that the decedent wanted to share in the estate, it can pass in ways that are not beneficial.
For example, depending upon the state law and the number of surviving children, a widow or widower may receive only one-half or one-third of the estate. This is often inadequate for some surviving spouses. Planning out your estate can help to avoid these problems.
In addition, depending upon the state law and the number of surviving children, children often take their property outright when it passes through intestate succession. The age, needs and degrees of competency are often ignored in intestate succession. This creates a problem if a decedent’s child, though perhaps eighteen and an adult in the eyes of the law, is nevertheless not at a point in life when the child has gained the knowledge or experience to deal with inherited wealth. It simply does not take much imagination to envision such a child either spending the money foolishly or living off the money in lieu of gaining an education or productive life skills.
In addition, intestate succession, which is controlled by state law, often occurs without consideration of federal estate tax implications. As a result, an estate distributed in accordance with intestate succession rules may end up paying significantly more in taxes.
Proper estate planning is designed to avoid the uncertainty of intestate succession as well as minimize the estate taxes. If you are interested in learning more about proper estate planning, contact Daniel Geraldi at (925) 364-4741.